The first major expansion since its inception is for the core product of account linking.
The startup unveiled a number of enhancements and new initiatives, which include moving into identity and income verification, fraud prevention and providing new tools.
Two weeks ago, payments giant Stripe announced it was encroaching on Plaid's territory with a new product of its own.
The majority of Plaid's network traffic has run through direct bank APIs, according to a post by the company's CEO and co-founder.
Perret said that Core Exchange is another way for the company to share data.
The company's core focus has always been account connectivity, according to the head of identity. He points out that over the years, Plaid has helped power the connection to millions of accounts, especially as more consumers use digital financial services.
Perret has added more companies to its network over time. New types of data connections have been added, such as payroll data, so people can verify their income and employment details when doing things like getting a loan or buying a car.
Demand from Plaid's customers for the company to address more of the on-boarding experience has grown in recent years as the adoption of fintech has grown.
This ultimately helps build trust and security for the entireecosystem as more people onboard to new fintech apps and services.
The $250 million purchase of Cognito by Plaid in January was the catalyst for the move into identity verification.
About 90 percent of Plaid customers need some type of ID verification, so this is a natural extension for Plaid. Perrett confirms that the new identity verification offerings from Plaid bring products from Cognito.
Plaid buys Cognito as it moves beyond merely connecting accounts
The company has integrated its new verification product into Plaid Link, with the aim of giving customers to link their accounts and verify their identities in a single, seamless user experience.
He claims that identity has always been top of mind for Plaid. In the past, Plaid customers had to work with many different vendors in order to handle the different aspects of the ID verification and compliance flow.
In what is perhaps the most surprising new news to come out of the company today, Plaid said it is also hoping to turn new users into active customers through account funding, which will give people a way to pay, or be paid for goods and services.
Account funding is the first step in the process of investing, sending money, or using a digital wallet.
The company believes that it is now offering risk-based tools to help lower the risk of fraud in account funding and transfers. The new Signal offering uses machine learning to analyze more than 1,000 risk factors and provide scores and insights that Plaid says provide more certainty that a transaction will settle. Plaid claims that early customers have seen reductions in unauthorized returns and fees.
A $425 million Series D was raised by Plaid in April of 2021. When the deal to be acquired by Visa for $5.3 billion fell through due to regulatory concerns, many say it was a blessing in disguise for the startup.
Identity verification is a well-funded space. Socure, a company that uses artificial intelligence and machine learning to verify identities, raised $450 million in funding in November. A startup focused on creating a personalized identity verification experience secured $50 million. A pair of Affirm employees raised $70 million for SentiLink.
On May 1st, I launched my weekly newsletter, The Interchange. You can get it in your inbox if you sign up here.
From partners to competitors: What Stripe’s latest move means for Plaid
All Rights Reserved © 2024
